Removal of stamp duty to favour apartment buyers?
New South Wales (NSW) Premier Dominic Perrottet has renewed the call to scrap the stamp duty for property buyers but said the Federal government needs to step in to make it happen.
What will it mean for property buyers if the stamp duty is removed? Will homeowners be better off by paying a land tax instead?
In this short video, Domenic Nesci, Wealthi co-founder outlined the basics of the proposed removal of the stamp duty. While it is still early days and more details need to be fleshed out around the proposal, it is good to know the implications of this proposal.
Currently, property buyers pay a 4% stamp duty upfront based on the value of the property.
Under the NSW State government’s proposal, the stamp duty will be replaced by an annual land tax.
The Premier said the proposal will make homeownership more accessible to many people, help the growth of the NSW economy and boost the annual incomes of NSW residents.
A long-term advocate of the phasing out of the stamp duty, Perrottet described it as “the worst tax that any government can have.” He added, “It (stamp duty) is a massive impediment for people to get into the property market.”
From his perspective, Domenic said the proposal means significant changes for property buyers and homeowners. It also means a massive cost to the NSW State government. It’s no wonder that it wants the Federal government to step in to make it happen.
“Based on my initial research, the proposed land tax will be based on the unimproved land value. Whereas the stamp duty being paid now is based on the current value of the property,” Domenic said.
“Will we see property prices increase? Will this mean more people can enter the property market without worrying about the stamp duty?” Domenic asked.
At first glance, the removal of the stamp duty may be favourable for apartment buyers. It will be much cheaper to buy apartments as there won’t be any land component to be taxed.
“At the moment, we don’t know much of the details (of the proposal) and we have to wait until the next NSW State budget to see how this proposal will be implemented,” Domenic said.
If you would like to discuss the Australian property market in more detail, reach out to the team to organise a time to have a conversation about how Wealthi can help you build a successful property portfolio.